Texas attorney plans to enter co-op legal fray
Member-owners of the Socorro Electric Cooperative might have a high-profile Texas attorney on their side in the lawsuit brought against them by the non-profit electric utility.
William “Bill” Ikard of Austin, Texas, represented plaintiffs in a case against the Pedernales Electric Cooperative that resulted in a $23 million settlement for the member-owners, caused a major overhaul of top management and opened up the co-op to transparency.
Last week, Ikard told El Defensor Chieftain he’s had discussions with Socorro attorneys Lee Deschamps and Steven Kortemeier, who are working on a response to the co-op’s lawsuit against its more than 10,000 member-owners.
“It’s our intention to get involved,” Ikard said in a July 15 phone interview. “Our expectation is to engage in a counter action — a counter claim — seeking declaratory judgment and other kinds of relief to solve all the pending issues that are ongoing.”
Contacted by phone again on Tuesday, Ikard said his office, working in conjunction with Deschamps and Kortemeier, is preparing to file some kind of action in the coming weeks.
“We are drafting a lawsuit as we speak,” he said Tuesday morning. “The date it will be filed depends on certain factors, but we should have something by mid-August.”
On July 6, co-op attorney Dennis Francish filed a complaint in the Los Lunas District Court seeking declaratory judgment and judiciary relief from a trio of bylaws, all of which address transparency. The co-op’s board of trustees directed him to do so by unanimous vote at its regular meeting on May 26, on the grounds they are unreasonable, unworkable and illegal.
The bylaws in question:
• Call for the board to voluntarily follow the Open Meetings Act and Inspection of Public Records Act
• Allow members access to co-op books, records and audits, with the exception of records protected by the Privacy Act
• Allow member-owners and the press to attend co-op board meetings and that a portion of the meeting be set aside for public comment. In addition, announcements of meetings are to be made in billing statements and advertised in local newspapers
Differing Opinions
Francish makes the argument that the new bylaws are impossible to implement because they don’t conform to state law. He said rural electric cooperatives are private, non-profit corporations not subject to laws that pertain to public entities.
“All we want to do is challenge those three bylaw changes as being unworkable and unreasonable, and beyond the scope of representative government,” Francish told El Defensor Chieftain two days after filing the suit. “That’s why you have board members at the exclusion of everyone else. Attempting to go beyond that is an attempt to go beyond the scope of corporate law.”
Ikard disagrees.
“It’s really kind of incomprehensible that one can make an argument, with a straight face, that members can’t prevail upon the board a rule that would require the meetings to be open,” he said.
Member-owners did exactly that in the case against Pedernales, which has become a model for transparency. Its website lists its open meetings and open records policies; annual financial reports for the last four years, including the 2008 auditor’s letter to management; and IRS 990 forms, which detail expenses incurred by its board of directors, for the last four years.
The Socorro Electric Cooperative’s board of trustees has been under scrutiny for its spending habits. The board’s spending practices are one of several issues addressed in the Pedernales case that mirror concerns of Socorro Electric’s member-owners, who overwhelmingly passed a bevy of reform-related resolutions in April.
“It appears that there are some distinct parallels, but we haven’t done discovery and it’s difficult to know all the facts without it,” Ikard said. “On the surface, it appears the issues at the bedrock are issues of transparency, democracy and good governance.”
An Unusual Case
Ikard said he’s been following the conflict between the co-op board and its member-owners from a distance.
“I have read the paper and frankly don’t understand it, because I’ve never seen anything quite like it,” he said of the board’s decision to file a lawsuit against its members. “The fact that they have sued all members of the co-op and named one, and the two newspapers, that’s very unusual.”
Listed individually as a defendant in the co-op’s complaint is Charlene West, a leader of the movement for reform.
Ikard said the response, or counterclaim, may center around West.
“It will likely be filed in Socorro as an intervention or third party action involving Charlene West,” he said.
Also named as defendants are both Socorro-based newspapers, the Mountain Mail and El Defensor Chieftain, and “all unnamed member-owners” of Socorro Electric Cooperative, which would include any person, business, educational institution or government agency that buys electricity from the only provider in a 11,400-square-mile area.
The co-op’s president, Paul Bustamante, said it’s unfortunate that all the member-owners have to be named in the suit, but in order to challenge the bylaws in court there has to be a plaintiff and there has to be a defendant.
Bustamante said West, against whom the co-op filed a restraining order in Socorro District Court last year, was singled out because she’s been disruptive at past meetings. The newspapers were named because two of the bylaws being contested allow the press to be present at board meetings, he said.
The complaint argues that “no corporate business can be effectively conducted in the presence of the press.”
Counterclaim Considered
Ikard filed the case against Pedernales Electric Cooperative in district court in Travis County Texas in April 2008. He represented three member-owners of the largest electric cooperative in the country and the suit was filed “on behalf of all members of the settlement class.”
Pedernales serves 220,000 members in central Texas west of Austin, compared to roughly 13,000 members served by the Socorro Electric Cooperative.
“The class action practice was designed for the very purpose of allowing a group of folks with common and typical claims to file in one suit,” Ikard explained.
The Pedernales settlement, agreed to in March 2009, and approved by the court two months later, required the co-op to return $23 million in patronage capital to members within a five-year period.
The settlement also called for the co-op to engage a consulting firm to investigate financial and managerial applications and implement new procedures recommended by the firm.
The litigation also led to subsequent reforms at the company, including the elimination of certain board and management expenditures, and compensation and the implementation of open records and meeting policies.
The fallout from the case resulted in a complete turnover of the board. The general manager and assistant general manager have been replaced. The former general manager and the senior partner in the law firm that served as counsel for Pedernales over a 20-year period are currently under indictment.
Ikard said the Pedernales case was a factor in getting legislation introduced in the Texas state Legislature that would require cooperatives to abide by open meetings rules. He said the bill did not become law because time ran out on the legislative session.
Ikard said the response to Socorro Electric’s lawsuit against its member-owners could name members of the board and other co-op officials.
“Our intention is to file in effect against the board as a counterclaim, or as a new lawsuit, against the co-op, board members and management,” he said.
Should the board act to drop the lawsuit against its members, as has been rumored, Ikard said he still plans to pursue a court case. In his opinion, the board has already gone too far.
“That would have no affect on our strategic plan,” he said. “I think it’s evident that the board is out of control and doesn’t know what they’re doing.”
Who is Bill Ikard?
Attorney William “Bill” Ikard is no stranger to trying cases against electric cooperatives in his home state of Texas, and he may take his legal expertise to New Mexico to defend a case brought by the Socorro Electric Cooperative against its member-owners.
Ikard, 64, said he’s currently working with Socorro attorneys Lee Deschamps and Steven Kortemeier to answer the co-op’s lawsuit challenging three new bylaws dealing with transparency that were overwhelming passed by member-owners at the annual meeting in April.
Ikard was one of a team of attorneys who brought a lawsuit against Pedernales Electric Cooperative of Johnson City, Texas. Settled last year, the case resulted in the return of $23 million in patronage capital to its 220,000 member-owners and a complete overhaul of the co-op’s top management.
In May of this year, he brought a punitive class action case against another Texas utility, Nueces Electric Cooperative, based in Corpus Cristi. He said many of the same issues in that case — including transparency of governance — were at the core of the Pedernales case and are not unlike what is happening in Socorro.
Ikard is also representing investors in a high-profile case against Triton Financial, alleging fraud and involving former NFL players who represented Triton.
A partner in the Austin law firm Ikard Wynne LLP, Ikard is a 1972 University of Texas law school graduate who has been practicing law ever since. He’s argued approximately 30 cases before the Texas Supreme Court.
Although he isn’t a member of the New Mexico state bar, he said accommodations can be made for him to be involved in trying a lawsuit in this state. He also noted that one of his firm’s attorneys, William Kilgarlin, a former Texas Supreme Court Justice, has a home in Santa Fe.
An Internet search revealed that Ikard was mentioned in a 1981 People magazine piece. The story was actually about his former wife, Kathy, an actress who also happens to be the daughter of the late news icon Walter Cronkite. The couple’s 25-year marriage ended in divorce in 2005. They have two children.
Ikard himself has noteworthy bloodlines. He is the son of former Texas Congressman Frank Ikard.
Contact T.S. Last